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Yoonsoo Lee |

Research Economist

Yoonsoo Lee

Yoonsoo Lee was formerly a research economist in the Research Department. His areas of research include macroeconomics, labor economics, and regional economics.

02.01.07

Economic Trends

Ohio’s Automobile Industry

Yoonsoo Lee and Brian Rudick

Ford Motor Company’s $12.6 billion loss in 2006, coming on the heels of General Motor’s $10.6 billion loss in 2005, leaves little doubt that the domestic automobile industry is indeed going through hard times. Part of the problem is their vehicle mix, but foreign manufacturers’ advantages in labor costs and currency values are also factors.

With seven final assembly plants and nearly 400 tier 1 suppliers, Ohio is at the heart of the industry, ranking second only to Michigan in terms of employment in the motor vehicle industry. Ohio employs more than 150,000 in transportation equipment manufacturing (NAICS 336); the industry’s share of total employment is more than double that of the U.S.

Employment in Transportation Equipment Manufacturing, 2005*

Title NAICS Ohio U.S. Location
quotient (OH/U.S.)
Level % of 336 Level % of 336
Transportation equipment manufacturing
336
150,895
100.0
1,769,833
100.0
2.1
  Motor vehicle manufacturing
3361
29,702
19.7
249,055
14.1
2.9
  Motor vehicle body and trailer manufacturing
3362
8,373
5.5
169,845
9.6
1.2
  Motor vehicle parts manufacturing
3363
94,671
62.7
679,143
38.4
3.4
  Aerospace product and parts manufacturing
3364
14,889
9.9
453,136
25.6
0.8
  Railroad rolling stock manufacturing
3365
389
0.3
27,254
1.5
0.3
  Ship and boat building
3366
816
0.5
151,907
8.6
0.1
  Other transportation equipment manufacturing
3369
2,054
1.4
39,495
2.2
1.3

*Note: The location quotient is the simple ratio of an industry’s share of employment between two locations.
Source: U.S. Department of Labor, Bureau of Labor Statistics.

What do domestic auto producers’ struggles mean for Ohio? To examine this, we’ll look at parts and final assembly manufacturers.

Parts Manufacturers

About two-thirds of all employment in transportation equipment manufacturing is in parts. Ohio’s 400 tier-1 suppliers specialize in metal stamping (22 percent of U.S. employment in the industry), air conditioning (20 percent of U.S. employment), and brakes systems (18 percent of U.S. employment).

During the 1990s, parts suppliers experienced unprecedented growth, as original equipment manufacturers (such as GM, Ford, Toyota, etc.) looked to streamline activities and buy parts from stand-alone suppliers rather than build them in-house. Recently, however, lower production from the Big Three, increased commodity prices, and heightened foreign competition have put pressure on parts suppliers. Locally, suppliers such as Delphi (12,441 jobs in Ohio) and Dana (1,801 jobs in the state) have felt the impact and are currently in Chapter 11 bankruptcy. Delphi plans to close six out of eight Ohio plants.

Nevertheless, the future of parts suppliers in Ohio may be less bleak than it seems. Many parts suppliers are tied to the fate of nearby assembly plants, and Ohio’s assembly plants look to be well positioned (more on that later). In addition, Ohio’s proximity to plants near its borders, such as Toyota’s Georgetown, Ky, plant, enables parts suppliers to open up in Ohio and deliver their products just outside its borders. Indeed, Ohio’s proximity to the I-65/I-75 automotive corridor makes it a prime location for auto parts suppliers, as documented in a Chicago Fed Study.

Final Assembly Plants

Ohio is home to seven final assembly plants. Like parts manufacturing, employment in motor vehicle manufacturing has fallen significantly over the past several years—28 percent in Ohio since 2000. However, some of this decline has resulted from productivity increases. In fact, total motor vehicle production in Ohio has declined only modestly over this time.

Ohio Automotive Assembly Plants

Plant Currently producing Recently produced Employees
Avon Lake Ford Econoline Ford Escape, Mercury Mariner, Mercury Villager, Nissan Quest
2,730
East Liberty Honda Civic Sedan/GX, Honda Element, Honda CR-V Honda Accord
2,500
Lorain* None Ford Econoline
0
Lordstown Chevrolet Cobalt, Pontiac Pursuit, Pontiac G4 Cheverolet Cavalier, Pontiac Sunfire
4,233
Marysville Honda Accord, Acura RDX, Acura TL Acura CL
5,300
Moraine Buick Rainier, Chevrolet TrailBlazer, GMC Envoy, Isuzu Ascender, Saab 9-7X Oldsmobile Bravada
3,050
Toledo (Parkway)** None Jeep Wrangler/Unlimited, Jeep Cherokee
0
Toledo North Dodge Nitro, Jeep Liberty  
2,969
Toledo South*** (Supplier Park) Jeep Wrangler/Unlimited  
333

*Plant closed in December 2005 and production moved to Avon Lake.
**Plant closed in June 2006 and production moved to Toledo South.
***Plant opened and production started in August 2006.
Sources: Ward’s Auto, manufacturers’ Web sites.

The state has certainly felt the effects of domestic manufacturers’ restructurings. In 2005, Ford consolidated its Lorain and Avon Lake plants; it also plans to close its Maumee stamping plant and its Batavia transmission plant. In addition, some shifts at area assemblers, such as Moraine’s third shift, have recently been eliminated.

Nonetheless, Ohio’s final assembly plants seem well positioned because of recent investments and their portfolio of models produced. In December 2006, Ford announced that it will invest $60 million in its Avon Lake plant so it can continue producing Econolines. In addition, GM invested more than $500 million several years ago in its Lordstown plant to get ready for the Cobalt, which will be produced through 2009. And although it closed its Toledo Parkway plant, DaimlerChrysler opened the new Toledo Supplier Park nearby. Moreover, Ohio plants produce some of the most popular cars in America, including the Accord, Cobalt, Econoline, Liberty, and Trailblazer.

Ohio Motor Vehicle Production

Plant 2001 2002 2003 2004 2005 2006
Avon Lake
46,240
26,891
19,581
42,949
27,061
179,293
East Liberty
236,029
222,742
231,844
190,731
205,300
237,926
Lorain
149,210
189,530
178,308
201,319
203,071
--
Lordstown
323,841
348,400
334,817
230,042
301,159
278,101
Marysville
456,348
421,975
445,544
432,972
441,879
446,946
Moraine
258,072
325,436
352,585
320,850
299,020
229,126
Toledo (Parkway)
122,862
76,608
84,486
97,701
96,381
45,737
Toledo North
146,485
225,714
237,712
224,067
220,718
209,594
Toledo South (Supplier Park)
--
--
--
--
--
40,050
Ohio total
1,739,087
1,837,296
1,884,877
1,740,631
1,794,589
1,666,773

Source: Ward’s Auto.

We should note that model changeovers can have a significant effect on production at the plant level. However, the state’s overall motor vehicle production has been surprisingly steady over the last six years, during which Honda was Ohio’s biggest producer, followed by GM, DaimlerChrysler, and Ford.

For greater detail on Ohio’s motor vehicle industry, see the Ohio Department of Development’s full report.